Why NJ's getting $22.1 million from GSK

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July 5, 2012 at 11:40 AM

On Tuesday, I wrote about New Jersey's share of the $3 billion GlaxoSmithKline settlement with the Justice Department. The British drug maker was charged with off-label marketing, paying kickbacks to doctors, and withholding important safety and efficacy information.

The settlement, which is the largest healthcare fraud settlement in U.S.history, includes a $1 billion criminal fine and $2 billion in damages and civil penalties. Of that, New Jersey will get $22.1 million. I asked the state Attorney General's office how that number came about, and got a voicemail back Tuesday evening from Ron Chillemi, the state's acting insurance fraud prosecutor. The answer, he said, is that the state tries really hard to calculate exactly what the alleged fraud cost taxpayers.

"We use formulas to determine as precisely as possible the loss to the state's Medicaid program," he said. "Those formulas vary depending on the theory of fraud, because we're trying to capture exactly what the loss is."

So for the off-label marketing claims, the state calculated the total prescriptions reimbursed by the state's Medicaid program for uses not approved by the Food and Drug Administration.

"For the kickback theory, which involves seven drugs, we calculated the Medicaid percentage of the overall utilization of the drugs inNew Jersey," he said.

Those formulas get the state to a good estimate of what the unlawful GSK marketing practices cost the state. But that's not quite the end of the calculation.

"In both case we applied a multiplier as a deterrent to the fraud," he said.